Saturday, July 26, 2008

Looking Ahead Toward the Housing Crisis.

After decades of relative stability, the rate of U.S. homeownership began to surge in the mid-1990s, rising from 64% in 1994 to a peak of 69% in 2004, near which it has hovered ever since . . . [S]ome of the explanation likely stems from innovations in the mortgage market that resulted in greater access to credit, lower down payment requirements, and easy and low-cost access to the equity in a house, which makes homeownership more attractive.

On the other hand, what would have happened if the Federal Reserve Banks produced more veridical research papers. That paper is an excellent warning regarding how such Fed Reserve research should be regarded in the future.